Posts Tagged ‘Consumer Protection’

Just two years after the Wall Street banks were bailed out and just three months after we passed a tough new law to rein them in, the Wall Street bankers want weak regulations so they can keep making risky bets with your money.

Because of the upcoming election, the banks apparently thought nobody would notice that they redeployed their horde of lobbyists to try to weaken the new rules as they’re being written.

They were wrong. We noticed. And we need your help to fight back.

Regulators with the Financial Stability Oversight Counsil are accepting public comments on the new law’s important “Volcker rule.” The rule is named for Paul Volcker, former chairman of the Federal Reserve and a vocal White House official who called on Congress to stop banks from making risky bets for their own profit while relying on taxpayer bailouts if the bets go bad.

All around the country, newspapers’ consumer journalists are taking notice and reporting on the injustice of forced arbitration. Most recently, Matthew Hathaway, columnist for the St. Louis-Post Dispatch, posted a short article on the “The Savvy Consumer” blog. While Hathaway reports on the biases and unfairness of the predatory corporate practice, he’s a tad overly optimistic that it may soon come to an end.

As Hathaway noted, the new Consumer Financial Protection Bureau created by the recently passed financial reform law will be authorized to ban or restrict forced arbitration. So will the Securities and Exchange Commission. But here’s what Hathaway leaves out: millions of other consumer contracts exist that fall outside of these agencies’ jurisdictions. The CFPB and SEC can restrict investor-broker contracts and contracts for other financial products as designated under the new law. But they have no authority to restrict or ban forced arbitration in numerous consumer contracts, such as those for employment, nursing homes, cell phones, and home building.

Hathaway guesses that the days of forced arbitration “could be numbered.” His optimism is refreshing. But even with SEC and CFPB’s new authority, we still need Congress to pass the Arbitration Fairness Act to eliminate pre-dispute forced arbitration from all consumer contracts for good.

Christine Hines is the consumer and civil justice counsel for Public Citizen.

The weaknesses identified by the authors include:
• A lower approval standard for devices than for drugs;
• Lax interpretation of the requirements for the medical device approval process;
• A loophole that allows manufacturers of novel devices to circumvent the premarket approval process;
• Failure of the FDA to appropriately regulate many types of devices that were first marketed prior to the 1976 enactment of the current regulatory scheme; and
• A superfluous appeal mechanism that gives manufacturers a second go for approval after FDA has rejected a device.

The authors enumerated specific cases where FDA allowed dangerous products to be sent to market. In one particularly egregious instance, a device was approved by the FDA director after other FDA board members had expressed significant concerns about the device, the vagus nerve stimulator, which is supposed to treat severe depression. Currently, the Centers for Medicare and Medicaid considers the device to be of such questionable value that it refuses to reimburse for it.

In the words of one of the researchers, Dr. Sidney Wolfe,

“The FDA’s mission is to protect public health, but allowing questionably effective products onto the market is inconsistent with that mission.”

Yesterday evening I met with a financial advisor from a large financial company. The meeting was going well and I was ready to sign on for much-needed financial advice until we started discussing the agreement.

I explained to him in my excitable way that I wouldn’t sign the document, explained to him what the arbitration clause meant and its impact on consumers. He was shocked. In a very brief moment he removed the professional mask and showed that he was appalled by the provision’s meaning. I told him about the need to support the Arbitration Fairness Act in Congress. He asked if it would eliminate arbitration. I explained that it wouldn’t – but it would make it voluntary, rather than forced. (more…)

It’s no secret that Public Citizen is against large banking institutions that are “too big to fail” – the corporations whose risky practices led to the crash of the financial industry.

While consumer activists have long been captivated with each ensuing step, trying to prevent the industry’s collapse from reoccurring, average movie-watchers are now getting a glimpse into the drama, as well.

HBO announced this month that it had bought the rights to New York Times reporter Andrew Ross Sorkin’s bestseller “Too Big To Fail: The Inside Story Of How Wall Street And Washington Fought To Save The System — And Themselves.”

Utility companies have been taking advantage of lenient federal regulators for too long, and we all get stuck with the bill.

Public Citizen is pushing for a return to a system in which rates are set by the cost of providing the power, rather than being set by the market, at least until the government’s failings can be corrected.

As the Senate banking committee prepares to consider financial protection reform legislation, Public Citizen and Consumers for Auto Reliability and Safety (CARS) call on Congress to protect the military from predatory auto dealer financing — an enormous problem for troops and civilian consumers alike.

Sen. Christopher Dodd’s (D-Conn.) Wall Street reform measure only partly closes the auto dealer loophole opened by the version that the House of Representatives passed Dec. 12, 2009. The groups urge lawmakers to close the loophole. In the current draft of the Senate bill, the proposed Consumer Financial Protection Bureau (CFPB) would have authority to write rules on non-bank lending, including payday loans and loans originated by auto dealers, but would have limited authority to enforce the rules.

“Rules have little value if they are not enforced,” said Robert Weissman, president of Public Citizen. “The bill should be strengthened to ensure that the CFPB has full enforcement authority. The financial industry has run roughshod over consumers and investors for too long. This is the time to stop it.” (more…)